Facts of the Case:

In this case, the petitioners were retired employees and family pensioners of various nationalised banks, who were beneficiaries under Group Health Insurance Policies issued by the National Insurance Company Limited pursuant to negotiations conducted by the Indian Banks’ Association (IBA).  For the policy year 2025–26, the petitioners were required to pay insurance premium along with GST at 18%, which they challenged.

The challenge was founded on Notification No. 16/2025–Central Tax (Rate) dated 17.09.2025, granting exemption from GST on certain health insurance services. According to the petitioners, the exemption covered their policies as well, and the insistence by the insurer, banks and IBA on payment of GST was illegal. The respondents opposed the petitions, contending that the exemption applied only to individual health insurance policies and not to group insurance policies. Reliance was placed on the wording of the notification, GST Council recommendations, and the regulatory framework under IRDAI.

Issue:

Whether Group Health Insurance Policies taken by retired bank employees through the Indian Banks’ Association are entitled to GST exemption under Notification No. 16/2025–Central Tax (Rate) dated 17.09.2025, or whether the exemption is confined strictly to individual health insurance policies.

Held that:

The Court examined Clause 36D of the notification, which explicitly grants exemption to services of health insurance business provided by an insurer “where the insured is not a group”, and noted that the accompanying Explanation removes any ambiguity by clarifying that the exemption applies only to contracts where the insured is an individual or an individual and family of such individual. The Court found that the legislative intent was clear and unambiguous. The petitioners’ argument that they did not constitute a “group” within the meaning of clause (zfb) of the notification—on the ground that they had come together only for availing insurance—was rejected. The Court held that such an interpretation ignored the IRDAI (Health Insurance) Regulations, 2016, which prohibit formation of a group solely for the purpose of availing insurance and mandate a clearly identifiable relationship between the group members and the group policyholder.

The Court emphasised that the policies in question were issued pursuant to collective bargaining undertaken by the Indian Banks’ Association under bipartite settlements, covering lakhs of serving and retired employees at negotiated premium rates, with benefits such as reduced premiums, relaxed underwriting norms, and coverage of pre-existing diseases—features inherently characteristic of group insurance policies. The Court also held that the slight variation in the definition of “group” between the GST notification and IRDAI regulations does not dilute the legal position, since the issuance of a group policy itself presupposes compliance with IRDAI regulations and the existence of a qualifying group.

Relying on the GST Council’s recommendations, the Court held that the exemption was consciously intended to make individual health insurance affordable, and there was no intention to extend the benefit to group insurance schemes. The Court further observed that exemption notifications in fiscal statutes must be construed strictly, and in case of doubt, the benefit goes to the State and not the assessee.

Accordingly, the levy of GST at 18% on premiums paid by retired bank employees under group health insurance policies was held to be valid and lawful, and the writ petitions were dismissed.

The High Court dismissed all the writ petitions and held that GST exemption under Notification No. 16/2025–Central Tax (Rate) is applicable only to individual health insurance policies and not to group insurance policies.

Case name: E.P. Gopakumar, A.R. Suryanarayanan, Rajan Samuel, K. Mohanakumaran, Federation of Bank of India Pensioners’ & Retirees’ Associations, Vinod Mukundan, K. Sasidharan Nair, All India Union Bank Pensioners & Retirees Federation Chennai, Jose P.L., And Others Versus Union of India, Goods & Services Tax Council, Bank of India, Mumbai, Deputy General Manager Hr Department, Bank of India, Indian Banks’ Association National Insurance Company Ltd. dated 08.01.2026

To read the complete judgement 2026 Taxo.online 28